Abstract

In this paper we examine whether there are systematic differences between the quality of life of an individual who is institutionalised and one who is not, keeping health status and income level constant. We also investigate what determinants are important in explaining why some individuals are in institutions and some are not. In doing this we use a nationally representative data set, the “Health 2000 in Finland”. When controlling for health and functional status, demographics and income level, we find that individuals who live in old people’s homes actually report significantly higher levels of subjective well-being than those who live at home. We argue that this finding can be explained by the waiting lists for care homes. This implies that there are individuals living at home who are so frail that they should really be living in an institution for elderly people, but because of the waiting lists for these institutions, they are living at home with a decreased quality of life as a consequence.